London, May 18 (Bloomberg) -- Chiron Corp., the third-largest U.S. biotechnology company, will buy U.K. rival PowderJect Pharmaceuticals Plc for 500 million pounds ($810 million) in cash to get the British company's vaccine business, people familiar with the transaction said.

Chiron will pay 550 pence a share, a 3.8 percent premium to PowderJect's closing price Friday. The offer, which will be announced tomorrow, is 14 percent higher than PowderJect's share price on April 27 when London's Sunday Telegraph first reported the talks.

Chiron, which is the world's fifth-largest vaccine maker, wants PowderJect's Fluvirin, the second-best selling flu vaccine in the U.S. Flu vaccine sales have risen as governments lowered the recommended age for the shot. Chiron already sells vaccinations for rabies, meningococcal C disease and childhood illnesses such as polio, measles and mumps.

Fluvirin, which trails Aventis SA's Fluzone in the U.S., had sales of 93.2 million pounds in the fiscal year ended March 31, a 40 percent increase from 2002. PowderJect had total revenue of 158.5 million pounds.

PowderJect spokesman Tim Anderson wasn't available for comment. Chiron spokesman John Gallagher declined comment. The acquisition was reported by the Sunday Telegraph earlier today.

Vaccines

Chiron, which also sells blood-testing products and biotechnology drugs, has made itself into one of the world's top vaccine makers by selling many of the products in Europe and other parts of the world. Only the company's rabies vaccine is sold in the U.S. Sales of Chiron vaccines reached $357 million last year.

Cambridge, England-based PowderJect supplies smallpox vaccine to the U.K., and is in the running for another smallpox contract with the British government.

PowderJect will allow Chiron to add to its offerings outside the U.S., analysts said. The acquisition will also give Emeryville, California-based Chiron experimental technology that allows the injection of drugs in powder form, without the use of a needle.